patrick.net

No. Duh. It's all Obama's fault!!!

From the article:

"No Benefit From Inflation

Economists tout the benefits of inflation. The idea is nonsensical.

Wages vs. the CPI are up 0.88% vs a year ago, but wages minus the CPI have spent more time in negative territory than positive territory since June 1973!

Moreover, please note the CPI does not take into consideration property taxes, income taxes, payroll taxes (social security, disability, unemployment), debt service, or various fees. The above numbers are even worse than they look.

I repeat my challenge to Keynesians: "Prove Rising Prices Provide an Overall Economic Benefit".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2015/01/wages-decline-most-on-record-average.html#XEUrQ1M0AX0atulj.99"

A small amount of inflation, usually 2% is very desirable. More inflation, especially double digit inflation is very damaging.

Strategist says

I repeat my challenge to Keynesians: "Prove Rising Prices Provide an Overall Economic Benefit".

And I'll repeat my challenge to Austrians: If I take the time to show how increasing prices are correlated with overall economic benefit, and also show historical data as backup, will you abandon the cult?

control point says

And I'll repeat my challenge to Austrians: If I take the time to show how increasing prices are correlated with overall economic benefit, and also show historical data as backup, will you abandon the cult?

You can't do that.

Strategist says

A small amount of inflation, usually 2% is very desirable.

No it is not.

indigenous says

control point says

And I'll repeat my challenge to Austrians: If I take the time to show how increasing prices are correlated with overall economic benefit, and also show historical data as backup, will you abandon the cult?

You can't do that.

He is right. If there was no evidence to this, economists would not be endorsing a 2% inflation.

indigenous says

Strategist says

A small amount of inflation, usually 2% is very desirable.

No it is not.

If inflation is always bad, disinflation must be good?

Strategist says

He is right. If there was no evidence to this, economists would not be endorsing a 2% inflation.

They do not correlate, and as the old saying goes correlation does prove cause.
Control Point is sour grapes on Austrian Economics which is his motivation. But the fact is there is no correlation between economic health and inflation. Pure poppycock. Unless or course you are one of the 1%

Strategist says

If inflation is always bad, disinflation must be good?

In deflation the value of the dollar goes up, so the value of wages goes up, the cost of the necessities of life goes down.

But the reason for the meme is that the value of investments go up. Inflation masks debt and war costs, which mostly benefits cronys.

If you buried a dollar in 1776 and dug it up in 1912 it would buy you 1.11 worth of stuff. If you buried a dollar in 1912 and dug it up today it would buy .04 cents worth of stuff. The Federal Bank was started in 1913.

"Prove Rising Prices Provide an Overall Economic Benefit"

quite simply it rewards those who produce, since the production's capital was obtained at a lower real cost than the final goods will sell for.

The opposite, deflation, destroys bona-fide wealth production.

The nation had this debate 140 years ago already but we've forgotten it of course.

http://en.wikipedia.org/wiki/Greenback_Party#Establishment

http://en.wikipedia.org/wiki/Cross_of_Gold_speech

Bellingham Bill says

quite simply it rewards those who produce, since the production's capital was obtained at a lower real cost than the final goods will sell for.

That is debatable. As the costs to produce go up with inflation, savers are more likely to be hurt.

The main instigator of inflation is the Fed and the attendant war. It's stated purpose is economic stability, since its inception there have 18 (I can't remember the exact number) recessions and they have been worse because of the Fed. Through money supply or changes in the reserve requirement.

They tried to mitigate the downturns in the business cycle through an increase in the money supply. Oblivious to the vital necessity of the economy ridding itself of deadwood. Which further exacerbates inflation.

Bellingham Bill says

The nation had this debate 140 years ago already but we've forgotten it of course.

As to those debates they are just an extension of borrowing from the future to pay for today.

indigenous says

borrowing from the future to pay for today.

yup, like oxygen, debt is the magic of life.

Too little you're stunted, too much, you die.

This makes sense; capitalism requires capital.

And what is capital? At its most basic it is the ability to produce goods and services that satisfy human needs and wants (aka "wealth").

I "borrowed from the future" $3000 in 1989 (~$5500 in today's money) to buy a Mac IIcx. I produced all my schoolwork on that machine 1989-92 and made tens of thousands with it as a contract programmer 1991-92 and independent businessman in Japan 1993-1995 with it.

The problem with debt inflation is when the debt is used to fund consumption not actual productive capacity aka "capital".

And housing is mostly consumption, and where the great fault of our modern economy lies. Only healthcare rentseeking rivals the wealth extraction we face in housing issues.

indigenous says

since its inception there have 18 (I can't remember the exact number) recessions and they have been worse because of the Fed

While 20th century recessions were in no way "worse" than 19th century depressions, these recessions were caused by the Fed, actually, in the attempt to fight wage-price spiral inflation.

Commodity money systems run into these same issues, since banking is the vector by which money moves from savers to debtors.

And we've got too many people to be a nation of savers. Savings is synonymous with capital formation, yet too much capital formation -- productive capacity -- collapses prices to the margin -- this dynamic is what the frackers are finding out now.

It wouldn't be that hard to fix our current economy. We've just got to go after the trillions of rents in housing and healthcare, so that the average joe can get through life with a lot more economic security (and a greatly reduced cost of living).

Everything else is a side show.

Bellingham Bill says

While 20th century recessions were in no way "worse" than 19th century depressions, these recessions were caused by the Fed, actually, in the attempt to fight wage-price spiral inflation.

Show a graph, conjecture means nothing..tBellingham Bill says

And we've got too many people to be a nation of savers. Savings is synonymous with capital formation, yet too much capital formation -- productive capacity -- collapses prices to the margin -- this dynamic is what the frackers are finding out now.

Bellingham Bill says

And we've got too many people to be a nation of savers. Savings is synonymous with capital formation, yet too much capital formation -- productive capacity -- collapses prices to the margin -- this dynamic is what the frackers are finding out now.

Bullshit, we have too many for centralized money

Bellingham Bill says

It wouldn't be that hard to fix our current economy. We've just got to go after the trillions of rents in housing and healthcare, so that the average joe can get through life with a lot more economic security (and a greatly reduced cost of living).

Everything else is a side show.

Nope simply get rid of the Fed and it would be a done deal.

Bellingham Bill says

The problem with debt inflation is when the debt is used to fund consumption not actual productive capacity aka "capital".

That is my point, not the other as investing is not what i'm saying.

indigenous says

Show a graph, conjecture means nothing

http://research.stlouisfed.org/fred2/graph/?g=WIK

Not a controversial observation, actually.

"The 1981-2 recession was a very different kind of event from the 2007-9 recession: basically, it was a recession deliberately created by the Fed to bring down inflation. The Fed raised interest rates sky-high, causing a plunge in home construction, which was the main driver of the slump. When Paul Volcker believed that we had suffered enough, he cut rates, housing sprang back — and it was housing that mainly drove the recovery. Reaganomics was basically irrelevant."

http://krugman.blogs.nytimes.com/2010/08/04/what-reagan-didnt-do/

indigenous says

While 20th century recessions were in no way "worse" than 19th century depressions, these recessions were caused by the Fed, actually, in the attempt to fight wage-price spiral inflation.

Your graph does not show what you are saying.

All the recessions were excerbated by the Fed.

It does not show that the 19th was worse than the 20th century.